A hard act to follow

Ben Bernanke will have a tough job ahead when he takes over at the Fed Reserve. AS Alan Greenspan begins his long goodbye, the legendary US Federal Reserve chairman can look back on a job very well done. Alan Binder, once Greenspan's number two, went as far as to describe his former boss as “the greatest central banker who ever lived". All of which makes Greenspan a very tough act to follow. That unenviable task fell last week to Ben Bernanke, who is president Bush's nomination to take over the post on January 31, 2006.

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By  Richard Agnew Published  October 30, 2005

|~||~||~|Ben Bernanke will have a tough job ahead when he takes over at the Fed Reserve. As Alan Greenspan begins his long goodbye, the legendary US Federal Reserve chairman can look back on a job very well done. Alan Binder, once Greenspan's number two, went as far as to describe his former boss as “the greatest central banker who ever lived". All of which makes Greenspan a very tough act to follow. That unenviable task fell last week to Ben Bernanke, who is president Bush's nomination to take over the post on January 31, 2006. At first sight, not only is Bernanke a good choice, but one the markets are happy with. US stocks rallied when word of his nomination leaked, and the general market sentiment is positive. But beyond the warm welcome, Bernanke — and the US and world markets — know that Greenspan's departure will lead to a period of uncertainty. Although both Greenspan and Bernanke are committed to low inflation, their preferred routes differ sharply. Greenspan liked to keep his cards close to his chest. His biggest tool was personal judgement, which is why the markets were so fascinated by his every word. Its every meaning was analysed, and Greenspan as a result became a celebrity banker. We can expect totally the opposite from Bernanke. He is known to favour strict monetary policy rules in the decision-making process, which means using sophisticated methods to set inflation targets. Or more to the point, to actually have inflation targets, most probably at around 2%. This is nothing new: inflation targets were first introduced in 1989 in New Zealand and have since been adopted by 20 other countries, mostly in Europe. Such a concept promotes transparency, and gives greater security to stocks, bonds, currencies and commodities. The big problem for the US, of course, is just who would set these targets? Would it be the Federal Reserve? Or the Treasury? Or Congress? And just what happens in the wake of a sudden economic crisis? Greenspan's midas touch got America through many difficulties, and his legacy is one of low inflation and strong growth. He will be a hard act to follow, even for Bernanke.||**||Source of good|~||~||~|This week we exclusively reveal the plans for over 200 of Hollywood's top animation experts to relocate to Dubai, as part of a plan to create the world's biggest outsourcing centre for animation. IT firm Netlink is in talks with major Hollywood studios to secure work, and the staff will be based at the Dubai Outsource Zone when it opens next year. The wider question is can outsourcing work in Dubai? The simple answer is yes. Mumbai, the world's best-known outsourcing place, has nearly 3000 call centres, each competing with the other. Most staff are trained at great expense, only to move to a better-paid job within months. Staff retention is less than 30% a year. The DOZ will be different, given how much more Dubai has to offer: a tax free, secure and stable environment to begin with. The city can also attract a pool of multi-lingual talent from around the globe. The DOZ is a spin off Dubai Internet City, but in time could become one of the city's most valuable assets.||**||Deliver deals, not debt|~||~||~|The arrival of Donald Trump on the Dubai property scene is long overdue. It should have happened a few years ago, and as we reveal this week, Trump has been in talks with Nakheel for over a year. But Trump is in town, and here to stay. The planned projects already announced are impressive, and with the Trump branding, sure to be moneyspinners. The combination of the celebrity tycoon and the unassumming but equally impressive Sultan Bin Sulayem from Nakheel will be interesting to watch. That said, Trump is no stranger to controversy. His Trump Hotels Group was forced to seek voluntary liquidation to stay afloat, and in the past decade, all his financial problems have been caused by excess debt. His personal reputation was rescued by the world-wide success of his television series The Apprentice, which helped gloss over the financial cracks. Trump, as always, is promising a great deal for Dubai. Let us hope he delivers deals, not debt.||**||

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